Turnover High Among Top US Defense Executives

Jul. 23, 2013 - 06:59PM
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WASHINGTON — Executives at defense companies are well compensated, with several routinely joining the ranks of the best compensated executives in the US. But in a year when all but two of the top 20 US executives on the Defense News Top 100 our list saw pay increases, another trend emerged: executive turnover.

Of the 20, five have essentially retired; one has been promoted; and one took over the company in the past year. It’s a telling sign of a new generation of defense leadership that has moved in to confront what is expected to be a prolonged defense downturn.

To create this year’s list, executives were ranked based upon US Securities and Exchange Commission (SEC) total compensation figures. These totals include salaries, bonuses, stock options and changes to the values of pensions.

Because of the reliance on SEC totals, only executives from US publicly traded companies are listed. To make sure that the executives on the list were closely associated with defense, executives from companies that derive less than 25 percent of their revenue from defense were excluded.

By law, publicly traded companies must annually disclose their top five compensated executives. The list includes both CEOs and other senior executives at defense companies.

Northrop Grumman topped the list with four company executives making the cut, led by CEO Wesley Bush (No. 3), followed by Lockheed Martin and Boeing with three each. Lockheed’s three are composed of former CEO Robert Stevens (No. 1), his designated successor, who subsequently left the company in the fall, Christopher Kubasik (No. 18), and the person who stepped in to take his place, Marillyn Hewson (No. 15).

Two companies not among the 25 largest in defense had executives on the list. Harris Corporation, the 34th largest defense contractor on this year’s Top 100 list, had both its former and current CEOs, Howard Lance (No. 10) and William Brown (No. 11) appear. Navistar, No. 64 on the Top 100 list, had its former CEO Daniel Ustian (No. 7) on the list.

The compensation numbers were generally up, although salaries and bonuses were fairly flat. Much of the increase is tied to stock options, which saw their value climb along with defense stocks in 2012, that were awarded to executives.

Expect a very different list next year, as new leaders step in and companies continue to grapple with shareholder pressure to rein in executive pay.